Retirement 101: Saving is just the start

Retirement 101: Saving is just the start
May 4, 2018 Bob Allen

The first slide of the seminar about retirement planning is the predictable paint-by-numbers Edvard Munch “Scream” that, after seven weeks of reading retirement stories on the internet, no longer is scary and, if I am honest, made me want to scream: “54 percent of U.S. workers have saved less than $25,000 for retirement, and 42 percent have saved less than $10,000.”

The numbers vary from story to story and survey to survey. But the message remains: As a group, Americans are unprepared for retirement.

So three slides into a seminar titled “Passport to Retirement” and already the message is starting to remind me of those drug commercials where 47 of the 60 seconds is devoted to the disclaimers featuring all the ways this medication suddenly could kill you.

Or as Charlie Brown’s teacher says, “Wah-wah, wah-wah!”

For the past couple of months, I have immersed myself in the world of retirement planning. Read. Attended one of those dinners where the first course is a pitch to purchase a fixed annuity. Talked with a longtime financial planner who spent years interacting with and advising listeners on the radio. More about these in future posts.

I’m 58. But this morning, writing this, I felt like, well, 65. Another week of reading about the perils of retirement or the ticking time bomb awaiting millennials, and I will feel so old that I’ll probably start yelling at kids to get off my lawn. And they’ll be my kids. And I suppose that if one day I’ll have to move in with them, I probably shouldn’t yell at them.

Death by listicle is not pretty. At this point, I can think of more than eight ways that retirement planning could kill me. And here is the one thing I can do now to fix this: Leave the classroom of this community college in suburban Detroit.

“For god’s sake, when will this long national nightmare end?”

And then the presentation starts to gain some traction. The benefits of investing early and compound interest. Stop thinking about retirement and more about “re-hire-ment.” (Not my pun, but it gets the point across that many people still will work in their later years.) Don’t just sell your house and move to Florida without actually living there … in July. Don’t think of it as a budget. Think of it as an income statement. Don’t assume you will spend less in retirement. The Roth IRA also can be a vehicle for saving for college.

This last point wakes up the 15 others in the classroom. Questions how? What if? It would appear that saving for college is a big deal.

And then we’re off to the retirement races by demystifying annuities, which is not easy thanks to the creators of annuities.

And then the Big Kahuna of retirement: Social Security. Will it be there when I’m ready to get it? When should I get it? Should I get it first, or should my spouse? What are the tax implications?

Apparently, Social Security is to people age 40 and older what Fortnight is to middle-school boys—which is a topic I know a lot more about than Social Security.

This was my “Eureka!” moment. This is where retirement, once and for all, ceased to be an old person’s affliction. And ceased to be more than just how much I’ve saved.

Yes, it’s a big deal that people haven’t saved enough, let alone saved anything, for retirement. But it’s just the start.

If we’re going to get control of retirement planning as a nation, then we have to confront it before the Grecian Formula years. As financial adviser Rick Bloom emphasized to me with some passion during a substantial conversation last month, it has to start in the schools. Retirement is just a synonym for personal finance. Seems obvious.

But if it’s so obvious, then why are we reading so many stories about a retirement crisis?

I left last week’s first session of “Passport to Retirement” with a lot to absorb. Worksheets on estimating costs and income. And yes, Social Security. Next week’s final 2½-hour session promises more of the same. Riveting? At times, maybe not. But sometimes, you can’t just rely on a car chase to keep your attention. You have to sit. And listen. And ask. And then do.

Because if you don’t do, eventually, you get doo-doo.

The challenges or crises of retirement, be they at the national or individual level, are not going to be solved by the five things you need to do now or the eight things to avoid. It will require more than a passport. It likely will take a concierge. Or maybe a Marshall Plan.

“Plan.” Yep, there’s that word again. Get used to it.

—Bob Allen

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